The commercial reality for the grocery sector during a cost-of-living crisis
Food doesn’t just provide us with nutrients. It’s at the heart of social interactions – whether we’re catching up with friends at a restaurant or spending time with family at the dinner table.
But being labelled an ‘essential’ doesn’t mean you can mitigate the cost-of-living crisis’ impact. Food prices are rising at their fastest rate for almost 45 years. 48% of UK adults are spending less on their food shops; at the same time, consumer spending at travel agencies was over 16% higher in April compared to the same point last year.
Consumers are pinching their pennies. However, luxuries such as holidays remain top-of-mind – particularly after their extended hiatus courtesy of the pandemic. Price is no longer the effective differentiator it once was, yet grocers still have to cultivate long-term loyalty through a period of economic uncertainty.
Shoppers’ expectations have shifted – the same should go for retailers. Discounts and promotions will only deliver momentary satisfaction for your community. Deploying fan-first tactics, rather than treating them as a consumer collective, can be the catalyst for generating and maintaining trust and affinity through this crisis.
Household has identified four key tactics that grocers can deploy to effectively navigate the coming years with their fandoms intact.
#1 – Keep purpose at the heart of your messaging
Shoppers’ elevated financial anxiety doesn’t mean they forget their principles. Rather, it prompts them to search for brands that can help take care of other things that matter to them – like combating climate change. And this also needs to radiate convenience. Fans are drawn to the brands that make it easy to be purposeful.
Safeguarding the environment is a value embodied by many – particularly amongst younger audiences. At least 65% of consumers want to make the right spending choices to live healthier, more sustainable lifestyles. Introducing eco-friendly packaging and being transparent about your supply chains can instil trust in your fans – as well as help manage your brand’s carbon footprint.
This selflessness doesn’t apply solely on a global scale; 70% want greater investment in their local neighbourhoods. Making food more accessible and investing in charitable initiatives – like Co-op’s partnership with Your Local Pantry, which will help over 32,000 UK households – can generate positive publicity and further your reach whilst also contributing to a good cause.
#2 – Don’t forget inspiration and innovation
Brands assume that shoppers’ priorities during a financial crisis is to acquire ‘essentials’ at the lowest possible price. The reality is that fans want to see inspiration – allowing them to make the most of existing schemes.
The launch of Tesco’s Clubcard in 1995 helped kickstart the loyalty programme craze. But whilst these have been a go-to tool in the pursuit of sign-ups, preferences have evolved beyond nominal savings. Grocers could take a leaf out of Sephora’s playbook – the beauty brand allows its fans to donate reward points to the National Black Justice Coalition. Creating community-based value can also amplify your ‘purpose over profit’ mindset.
#3 – Service is the new frontier
Keeping costs to a minimum used to be the key to unlocking large sales numbers. But with 58% of consumers acknowledging that customer service is more important than price, it’s time for grocers to shift their lens. Consistently delivering premium service can reduce reliance on discounts to foster loyalty.
M&S has introduced over 800 self-service checkout tills across its UK stores. This strategy should streamline the in-store experience and remove the friction of long queues. And this blueprint can also be a stepping stone to greater revenue. 86% of shoppers acknowledge they will pay more for unrivalled customer experience (CX).
#4 – Use convenience to cut through the noise
Delivering convenient experiences used to be optional for grocery brands – now it can be the difference maker between you and your rivals. 97% of consumers have cited a lack of convenience when abandoning purchases.
Embracing technology – both old and new – can empower grocers to deliver food to fans at the moment they want it most. Iceland has leveraged traditional vending machines to provide Myprotein meals to gym-goers – without them having to step foot in an Iceland store. Understanding your fans’ personal habits is the first step to creating the seamless shopping experience they crave.
It’s (not) about the money, money, money
Improving revenue and ROI will always be at the forefront of grocers’ business strategies. But your offering doesn’t stop at products and pisces – and it will take more than a discount sticker to secure brand loyalty during the cost-of-living crisis.
Fans are searching for deeper connections with the brands they purchase from. Acknowledging their evolving preferences and the desire for community investment and sustainable work models can be the catalyst to bringing your fans back to the store time-and-again.
Want to discuss how you can achieve long-term brand loyalty? Get in touch with Household today to discuss how to win the hearts and minds of your fans – and where we can support you moving forward